GAB Decision 760
July 19, 1986
Louisiana Department of Health and Human Resources;
Docket No. 86-34
Ballard, Judith A.; Ford, Cecilia S. Garrett, Donald F.
The Louisiana Department of Health and Human Resources (Louisiana,
State) appealed a $93,596 disallowance by the Health Care Financing
Administration (Agency, HCFA) of federal financial participation (FFP)
in the cost of intermediate care facility (ICF) services to Medicaid
recipients claimed under Title XIX of the Social Security Act. The
services were provided by Meadowcrest Living Center (Meadowcrest), a
facility with both skilled nursing (SNF) and ICF patients, during the
period May 18, 1984 through November 30, 1984.
The issue in this case is whether Meadowcrest was validly certified as
an
IFC during the period of the disallowance. The State conceded, in
its
brief dated March 25, 1986, that Meadowcrest was not validly
certified during
the period May 18, 1984 through July 10, 1984 but
contended that Meadowcrest
was validly certified for the balance of the
disallowance period. We
find, however, that Meadowcrest was not validly
certified during the period
July 11, 1984 through November 30, 1984, and
therefore uphold the
disallowance in full.
Background
The Medicaid program under Title XIX of the Social Security Act
is
administered by the states and funded in part by the United
States
Department of Health and Human Services. An ICF such as
Meadowcrest
must enter into a provider agreement with the administering, or
single,
State agency (here the Department of Health and Human Resources)
in
order to participate in the Medicaid program and be reimbursed
from
federal funds (FFP). Before a provider agreement can be executed,
the
ICF must be certified by the State survey agency as meeting
federal
standards.
HCFA alleged and the State did not dispute that the State survey
agency
conducted the initial survey of Meadowcrest on(2) May 18, 1984 and
found
13 Life Safety Code deficiencies. The State did not dispute
HCFA's
allegation that the State executed a provider agreement on August
7,
1984, with certification based on a plan of correction dated July
11,
1984, which indicated that eight of the 13 deficiencies had been
or
would be corrected and a recommendation by the State survey agency
that
a waiver be granted for two other deficiencies. /1/
It is also not disputed that in a post-certification visit on
November
5, 1984, the State survey agency found that three of the
deficiencies
which were supposed to have been corrected as of July 11, 1984
in fact
had not been corrected. Exhibit C. In addition, the
surveyors found
eight new deficiencies. Ibid. A new plan of correction
dated November
5, 1984 stated that all deficiencies would be corrected by
December 1,
1984. In a second post-certification visit on January 18,
1985, the
State survey agency found that all but two "insignificant"
deficiencies
had been corrected. Exhibit F. In a third visit on
March 29, 1985, the
survey agency found that all deficiencies had been
corrected. HCFA
Brief, p. 2.
The Medicaid regulations make FFP available for ICF services "only if
the
facility has been certified as meeting the requirements for
Medicaid
participation, as evidenced by a provider agreement . . . ." 42
CFR
442.30(a). However, the regulations state also that "an agreement
is
not valid evidence that a facility has met those requirements" if
HCFA
determines that the State survey agency failed to follow the rules
and
procedures set forth in Subpart C. Ibid. Using that authority,
known as
"look-behind," HCFA disallowed FFP for the period at issue because
it
found that the State had not followed sections 442.105 and 442.111
of
Subpart C. /2/
HCFA argued that FFP was not available prior to December 1,
1984,
because Meadowcrest did not meet federal requirements for
certification
prior to that date. As noted above, the State did not
dispute that
Meadowcrest was deficient in meeting Medicaid standards not only
on May
18, 1984 and July 11, 1984, but at all times prior to December
1,
1984.(3)
In such a situation, the pertinent regulation is 42 CFR 442.105,
which
states:
Sec.442.105 Certification with deficiencies: General provisions:
If a survey agency finds a facility deficient in meeting
the
standards specified under Subpart D, E, F, or G of this part, the
agency
may certify the facility for Medicaid purposes under the
following
conditions:
(a) The agency finds that the facility's deficiencies,
individually
or in combination, do not jeopardize the patient's health and
safety,
nor seriously limit the facility's capacity to give adequate
care. The
agency must maintain a written justification of these
findings.
(b) The agency finds acceptable the facility's written plan
for
correcting the deficiencies. (Emphasis added)$% Compliance with
the
Life Safety Code of the National Fire Protection Association is
required
by section 442.321 of Subpart F.
The State did not dispute that there was no written finding that
the
deficiencies at Meadowcrest were not a threat to the health and
safety
of the ICF patients, and that the capacity of Meadowcrest to
give
adequate care to ICF patients was not seriously limited by
the
deficiencies. That the State certified Meadowcrest does not remove
the
requirement for an explicit written finding on health and safety
and
capacity to give care. See New York State Department of
Social
Services, Decision No. 616, December 31, 1984, p. 10. Where
the
requirement is not met, there can be no FFP. Ibid. /3/
(4)
HCFA also argued that the State's certification of Meadowcrest prior
to
December 1, 1984 was not valid because it did not set out an
automatic
cancellation date as required by 42 CFR 442.111. That
regulation states
that where, as here, the State purports to certify a
facility with
deficiencies (based on an acceptable plan of correction) for a
12-month
term, the State must include in the certification a condition that
the
certification will be automatically cancelled on a specified date
within
the certification period unless --
(1) The survey agency finds that all deficiencies have
been
satisfactorily corrected; or
(2) The survey agency finds and notifies the Medicaid agency
that the
facility has made substantial progress in correcting the
deficiencies
and has a new plan for correction that is acceptable.
The automatic cancellation date must be no later than 60 days
after
the last day specified in the plan for correction of deficiencies
under
Sec. 442.105.
HCFA alleged, and the State did not dispute, that the certification
here
did not contain an automatic cancellation clause. Thus, for this
reason
also the certification did not meet Medicaid requirements and was
not
valid prior to December 1, 1984.
As noted above, Louisiana did not dispute the facts alleged by HCFA as
the
basis of the disallowance. The State's only defense was that it
had
been confused as to the effective date of valid certification
of
Meadowcrest as a result of a series of telephone messages to the
State
and letters to Meadowcrest (concerning its SNF certification) during
the
period December 20, 1984 through May 31, 1985. In a
telephone
conversation with a State official on December 20, 1984, a HCFA
official
referred to July 11, 1984 as the "earliest possible" date
of
certification. In a letter to(5) Meadowcrest dated May 31, 1985,
HCFA
stated that the facility could have been certified
July 11, 1984, the date the Life Safety Code plan of correction
was
signed, or December 1, 1984, the earliest date the State could
verify
correction of the major deficiencies. In this case, we selected
the
latter date.
Exhibit 5.
In a telephone conversation on February 13, 1985, a HCFA
official
allegedly told the State that the earliest date of certification
was
January 18, 1985. Also, the State alleged that by letter dated
March
27, 1985, HCFA informed Meadowcrest that it met SNF requirements
for
certification as of December 1, 1984.
HCFA did not deny the contents of the December 20 conversation and
both
letters to be as alleged by the State. HCFA did supply a contact
report
for the February 13, 1985 conversation but the report did not refer
to
January 18, 1985 as the effective date of certification. Exhibit
F.
HCFA noted that the wording of the May 31 letter "could have
been
clearer," but contended that neither in the letters nor in
the
conversations did HCFA officials misstate the Medicaid requirements
or
give misleading information. HFCA Supplemental Brief, p. 9.
We agree that these events did not reasonably mislead the State to
its
detriment. In the first place, all of them were subsequent to
the
period at issue and the State did not show in what way they might
have
been a factor in the State's certification of Meadowcrest.
Secondly,
however confusing the references to different dates might have
been, at
no time was the State told that the unambiguous requirements of 42
CFR
442.105(a) and (b) and 442.111 did not apply. Since the State did
not
have a health and safety/capacity statement or an automatic
cancellation
date, it should have known that its certification of Meadowcrest
was not
valid between July 11, 1984 and December 1, 1984. /4/
(6)
Conclusion
For the reasons above stated, the disallowance is upheld. /1/
The
remaining deficiencies were
apparently the subject of appeals to
other State and parish (county)
authorities. Exhibit B. /2/
The
look-behind authority
exercised by HCFA in this case is called
"procedural" look-behind.
Under the Omnibus Reconciliation Act of 1980,
Pub. L. 96-449, effective
December 5, 1980, HCFA also can exercise
"substantive" look-behind
authority. /3/ Because the State
did
not dispute that it failed to meet the documentation requirement in
42
CFR 442.105(a), we did not consider whether its acceptance of the
July
11, 1984 plan for correcting the deficiencies would have been proper
had
the State made the necessary written findings. 42 CFR
442.105(b).
Although HCFA might have exercised its substantive look-behind
authority
to challenge the State's decision to accept the plan, the record
was not
sufficiently developed for us to determine whether the July 11 plan
was
acceptable. We note, however, that the State did not dispute
HCFA's
allegation that at least three of the deficiencies which the July
11,
1984 plan indicated as having been corrected were found not to have
been
corrected at the time of the November 5, 1984 post-certification
visit.
See, Exhibits B and C. A plan of correction submitted November
5, 1984
called for correction of those deficiencies by December 1,
1984.
/4/ Louisiana also contended that it was unaware, prior to receipt of
an
October 23, 1984 letter from HCFA, that a requirement for annual
surveys
of long-term care facilities, rescinded in 1982, had been
reinstituted.
The need for annual surveys was not an issue in this
case. Moreover, as
HCFA noted, the May 1984 survey was the initial
survey of Meadowcrest.